The S&P 500 appears overbought after a near 5% rise over the past month. Our indicators shifted to moderate risk-on this week, although we will remain active on pullbacks given seasonal strength for equities. For now, lower support is seen around the $4,500 breakout level in the S&P 500, which could stabilize a pullback.
The CBOE VIX Index, a measure of S&P 500 volatility, is holding support above the 14 level, possibly indicating complacency among market participants. We also noticed a spike in the VIX/SPY correlation, which typically precedes short-term weakness in stocks.
VIX:SPY (20-day) Correlation
Source: Cannon Advisors, StockCharts.com data